Remote controls

Smart meters promise another reason to resent energy firms

The midnight oil

GOOD neighbours avoid doing laundry in the small hours. Yet householders in the north east of England are growing keener on late-night loads. Watched by academics at Durham University, volunteers are testing a tariff that makes power more expensive when demand is high. Some use washing machines that run only when energy is cheap.

Flexible pricing is supposed to discourage power use at peak times, thereby bringing down the overall cost of generation by cutting the need for power stations that run only a few hours each day. Controlling energy use would also help network operators handle fluctuations in renewable power, which rises and falls depending on how windy or sunny it is. These problems will get more serious as Britain decarbonises: using more green electricity to power things such as cars and heating will make demand spikes bigger—and thus more costly—just as growth in renewables makes supply less dependable.

Some Britons have been using cheaper off-peak power since the late 1970s, when “Economy 7” tariffs were created to encourage overnight demand for juice from nuclear power stations. Smart meters, which will add about ￡12 billion ($20 billion) to energy bills as they are rolled out over the next five years, are meant to save suppliers money by wirelessly transmitting meter readings, and to provide households with information that can help them to use less power. What excites energy experts is that, by recording full details of energy consumption, they could also make it easier for suppliers to create several peak and off-peak periods during each day, or even let prices float freely depending on the weather. Last month Ofgem, the energy regulator, said it was mulling reforms that could enable rates to change every half-hour.

The problem is that a proliferation of complex tariffs risks making it more difficult for bill-payers to identify the cheapest ones, even as regulators battle to simplify the market. Critics also say that punitive charges at peak times could affect the poorest families disproportionately, because they already use power only when it is essential. And some fear that, without stronger competition, energy firms would use dynamic tariffs to raise prices, not just to even out demand.

The biggest worry is that people will not be persuaded to change their routines. Many already pay too much for their energy because they have never bothered to switch supplier. A study in 2012 by Consumer Focus—now part of the Citizens Advice Bureau—found that 38% of households with Economy 7 or similar tariffs did not use enough off-peak power to make it cheaper than a standard rate. Trials of more dynamic tariffs report mixed success—and almost all of those have involved green-minded volunteers, not busy families.

Enthusiasts say variable pricing will work best when people can set gear such as freezers, boilers and air-conditioners to respond automatically to pricing signals broadcast to their smart meter, in exchange for a discount from their supplier. Fridges need not run constantly to keep their contents fresh, for example; clever ones might perhaps turn themselves off during peak demand periods.

Yet bill-payers will probably find it creepy to hand outsiders control of their appliances. A household full of smart devices would delight hackers. And it will bring chewy legal problems, such as working out who to blame should faulty appliances churn through premium-priced power. As Britain’s smart grid expands, rumbling washing machines may not be the only thing keeping people awake.